CD Account Rates Calculator

A certificate of deposit (CD) is a type of savings account that pays a fixed amount of interest over a set period of time. The best CD accounts typically offer higher interest rates than most standard savings accounts but lack the same flexibility. These low-risk accounts can be a good way to grow your savings.

CDs come with a variety of terms and interest rates, ranging from as short as three months to as long as ten years. Terms vary between banks, but you can still accurately predict how much money you'll have when the CD matures with a CD account rates calculator. We've included one here to help you decide if a CD is right for your financial goals.

CD Account Rates Calculator

How Does a CD Account Rates Calculator Work?

This useful tool takes the relevant information about a CD — including the deposit amount, annual percentage yield (APY), compounding frequencies, and term — and does the math for you. Using this calculator, you can accurately predict how much money you'll make from your initial deposit at the end of the CD term.

Inputting Initial Deposit Amount

First, plug in how much you plan to deposit.

While it's true that the more you deposit, the more you stand to make at the end of the term, remember that CDs aren't like bank accounts. You can't just withdraw your money in the middle of the term if you need it. So you should only deposit an amount you're comfortable "losing" for that period of time.

Think of it like pre-ordering an item. If a great book is coming out in a few months and you want to make sure you're one of the first to read it, you might buy it a year ahead of time. You effectively get nothing for your money for a year. A CD is similar. You don't get an immediate return for your money, but at the end of the term, you get more money back.

Determine what's comfortable for your budget, and input that number in the initial deposit field.

Selecting Interest Rate

Banks publish their CD annual interest rates on their websites, so do some research to find real terms that are available. When you've found a potentially good CD, input the APY in the interest rate field.

Choosing Compounding Frequency

CD rates usually compound daily or monthly. Again, banks publish compounding frequencies of specific CD products on their websites, so make sure you input the right frequency for the bank you're considering.

Calculating Potential Earnings

Finally, press calculate! The CD account rates calculator will run the numbers and tell you how much your account will be worth at the end of the CD term.

Strategies for Maximizing CD Returns

CDs aren't like stocks that may rise and fall unpredictably. You won't make a big windfall off of a CD, but there are strategies to grow your wealth through CDs.

CD Laddering Technique

A CD ladder is a strategy in which you invest in multiple CDs with staggering maturity dates and then reinvest the gains. Each CD you open is like a rung on a ladder. For instance, say you have five CDs:

• $500 in a one-year CD
• $500 in a two-year CD
• $500 in a three-year CD
• $500 in a four-year CD
• $500 in a five-year CD

They may all have the same interest rates, but the actual interest rate isn't important for this particular example. What's important is the maturity dates. To build an effective ladder, after the first CD matures, you take the principal plus interest and invest it in another five-year CD, which is now set to mature the year after the initial five-year CD. After the two-year CD matures, do the same thing, and so on and so forth. Through this ladder, you keep earning increased returns year after year.

Bumping Up a CD Rate

Some banks offer bump-up CDs, which let you request a rate increase during your CD term. Like with a traditional CD, when you request a bump-up, you must agree to leave the money in the CD for the complete term. While they're a great option, bump-up CDs are somewhat rare.

Tips for Choosing Suitable CD Term Lengths from Money Atlas

CDs can be a great way to diversify how you grow your wealth while mitigating the risk of investing. There are many CDs on the market, however, so it can be difficult to decide on the best option. Use Money Atlas to get expert comparisons for all the accounts before you buy.